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Products of the future – is SA innovative enough?

01 August 2016 Schalk Malan, BrightRock

Are we on top of product innovation? Do we have the audience? Do we have the innovative minds?

South Africa’s life insurance industry is internationally recognised for the quality of its products, its innovation and its level of sophistication.

However, there are so many regulatory and technological changes taking place within and outside the industry that are creating a plethora of opportunities where innovation still needs to take place.

Still a long road ahead

The latest performance figures of the long-term insurance industry, as a whole, give us a lot to be proud of. Not only did the life insurance industry make benefit payments amounting to R412.2 billion in 2015 but it also accounts for close to 80% of the premiums in the country’s insurance market.

That said, the drop in the number of new individual risk policies for death, disability and dread disease from 5 million in 2014, to 4.8 million in 2015 – not to mention South Africa’s R24 trillion risk insurance shortfall, is a clear indicator that we still have a long way to go in terms of innovation if we want to meet the market’s needs.

Adapting and delivering

A significant amount of innovation is taking place to distribute more cover through digital platforms and price-oriented insurance aggregators.

In spite of innovation on this level, many providers tend to lose focus on offering tacit, needs-matched value in their products – the main reason why compliance with regulatory measures like Treating Customers Fairly (TCF) and the Retail Distribution Review (RDR) is becoming increasingly important and is expected to become a leading driving force for innovation in the industry.

The new generation of consumers want to understand the products they are buying. We are seeing a consumer demand for a shift from plain products sales to services that find tacit, premium efficient cover that match clients’ needs.

Technological advances will also continue to be a step ahead of innovation in the insurance industry, and the industry will have to continuously adapt and deliver products that fit into this environment.

Client-centric products

Forward-thinking long-term cover providers are not only embracing, but developing sophisticated technology and incredible processing power to create products that are intuitive, flexible and customisable to match clients’ needs and offer good value for money. These products are already offering much better value and up to double the cover that traditional products could offer for the same premium.

With medical advances there will also be increasing pressure to make sure claims definitions match client needs and give them the certainty they expect from their life insurers.

For example, the ability to diagnose Parkinson’s disease is now a reality. Products paying on diagnosis – where possible – are the products of the future.

And thanks to the enhanced data or so-called Big Data, these providers also have growing insight into exactly what those needs are.

In conclusion, innovation in the industry is not as simple and one-dimensional as one might think. There are various factors to consider, and the common thread through all these driving factors will be the requirement to offer transparent, client-centric products that match the needs of clients on all levels and touch points of the product.

There already are companies in the market that manage to do this and will continue to innovate as they strive to continue to match the needs of their clients. And the companies that are lagging behind this trend will continue to have a lot to do before they will be able to truly say they are on top of product innovation.

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